MBIA scores court victory over BofA

29 December 2010

Financial services company MBIA has won an important court ruling against Bank of America (BofA), which will boost the former firm's attempts to gather evidence relating to the alleged fraudulent representation of mortgage bonds.

At a hearing in New York on December 23rd, a judge ruled that MBIA was free to use statistical sampling in an effort to prove BofA misled it over underwriting standards for loans worth around $20 billion.

In a statement, BofA described the judgement as "limited and procedural in nature" and claimed it intended to defend "aggressively", adding: "As the court notes, MBIA must prove each element of its claims - this we believe it cannot do."

MBIA is suing for over $1.4 billion paid out in insurance claims awarded as a result of bonds which pooled loans from Countrywide Financial, which now trades as Bank of America Home Loans.

The announcement comes as speculation intensifies that BofA could be the next high-profile subject of information obtained from US embassy cables by whistle-blowing website Wikileaks.

By Asim Shah

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